Price Records Keep Falling

On one hand, futures trade by the end of last week was giving indications that cattle prices may be near their peak in the short term. On the other hand, it seems like available supplies of calves and feeders have yet to sate buyer demand.

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On one hand, futures trade by the end of last week was giving indications that cattle prices may be near their peak in the short term. On the other hand, it seems like available supplies of calves and feeders have yet to sate buyer demand.

Summarizing last week’s auction trade, analysts with the Agricultural Marketing Service (AMS) fairly well gushed, “Buyer demand, trading activity and price levels were unprecedented with all-time record high marks posted on most weights and classes across the country. Market watchers have basically run out of superlatives to use in trying to describe the recent feeder cattle markets; most are down to just saying that they have never seen anything like it before, but the reality is that no one has ever seen anything like it before.”

In round numbers, feeders and yearlings traded $2-$6 higher last week, compared with the previous week. There were many instances of averages as much as $10 higher, according to AMS. Steer and heifer calves weighing less than 600 lbs. traded $6-$10 higher, with several major auction markets quoting lightweights as much as $20 higher.

“Stocker calves have been raising the price bar for two months now and the CME Feeder Cattle Index that chronicles the nationwide average for a 750-lb. feeder steer is over $7 past the 3 ½-year-old record broken in late December.”

Though a fair number of folks are understandably wary of the record prices, fearful the other proverbial boot will drop (see High Prices Are No Fluke), the fact is that the high prices are in turn fulfilling their own prophecy.

“How long will this bull market last? How far will this bull market go?” asked AMS analysts Friday. “Simply, the market rally will continue until demand is satisfied. Calves will eventually have to get high enough that cow-calf production can financially compete for acres with row crop farming, recreational hunting or conservation. In most parts of the U.S., even current cattle prices are still not enough to keep landlords from kicking cattle off their pastures. In areas where farming is feasible, cropland leases for two to three times that of a grass farm, and in dry-arid climates too many acres are needed for cattle production as ranchers try to maintain eroding improvements like fences and facilities.

“Unfortunately, many cattle people across the country are seeing this recent surge in prices (at every level of production) as an opportunity for dispersal, rather than expansion. Retaining heifers or putting older cows back into production is not currently happening at a high rate, as producers have to outbid the feedlots and/or the cow packers.”

The summary below reflects the week ended Jan. 21 for Medium and Large 1 – 500- to 550-lb., 600- to 650-lb. (calves), and 700- to 750-lb. feeder heifers and steers (unless otherwise noted). The list is arranged in descending order by auction volume and represents sales reported in the weekly USDA National Feeder and Stocker Cattle Summary: